Trade Effects of Regional Economic Integration in Tajikistan: The Case of EurAsEC

Abstract

Since URSS was disintegrated, after several years of civil war and with a seriously weakened economy, Tajikistán begins a process of regional integration in the second part of the 1990's, by signing several economic integration agreements with ex-soviet countries and with other neighborhood countries and with international institutions and organizations. The most significant agreement of this type involving this country, having better prospects for the future, is the Eurasian Economic Community (EurAsEC), formed in 2000. The analysis of the different integration options followed by Tajikistan is undertaken in chapter two. In this context, the ultimate goal of the research is to analyze the effects of this integration agreement for Tajikistán's economy and, in particular, for the foreign trade in this country. Before turning to the empirical analysis, chapter one review the economic and empirical literature on economic integration, focusing on the potential effects, both the static effects covered by traditional theories and the dynamic effects in which the new economic integration theory is focused, in particular for developing countries. Once the theoretical part is addressed, two chapters are devoted to the analysis of the effects of EurAsEC for Tajikistán. First, in chapter three, by estimating an augmented gravity model using panel data for the period 1995-2013, we analyze static trade creation and trade diversion effects of EurAsEc on the area as a whole and on Tajikistán. Chapter four study the dynamic effects of EurAsEc in Tajikistan, as well as, shows evidence on several integration factors influencing the desirability of developing countries.